Understanding No-Fault Auto Insurance in Michigan

Michigan is one of the handful of states that enforces a no-fault auto insurance system, effectively requiring drivers to have personal injury protection, property protection, and residual liability. This means that your insurer will cover things like lost wages or medical expenses as a result of an accident no matter whose fault it is.

At Doeren Mayhew Insurance Group, we understand the complexities of navigating the no-fault rule in Michigan — and its significant impact on how auto insurance claims are processed in the event of a collision. Counter to more common fault-based systems in states like Vermont — where plaintiffs may seek damages for any harm caused by the at-fault party — claimants in Michigan cannot.

What is No-Fault Insurance?

The argument for no-fault accident insurance emerged in the early 1970s with claims that excessive time and money were expended while the courts determined who was at fault. To that end, lost wages and medical bills were overlooked, negatively impacting Michigan individuals, families, and businesses.

Also, given limits on insurance policies, minor injuries were commonly compensated more adequately than catastrophic injuries. The Michigan no-fault reform was introduced in 2019 to optimize the impact of coverage while imposing lower rates — and a greater number of PIP coverage options for Michigan drivers and policyholders.

No-Fault Insurance Basics

No-fault insurance was implemented to simplify an otherwise complicated compensation process related to auto accidents in Michigan. This system also allows quicker access to medical benefits and rehabilitation services for injured parties regardless of who the guilty party is. Eliminating the need for protracted legal battles that take time to determine fault also relieves the burden of the victim to prove the insured’s fault.

Benefits of No-Fault Insurance

A key component to no-fault benefits is Personal Injury Protection (PIP). This coverage will cover the following protections to advance your recovery after a collision:

Allowable medical expenses that are not covered by your health insurance, depending on your
Personal Injury Protection (PIP) selection

Transportation costs related to attending medical appointments

Home accessibility costs to accommodate your recovery from accident-related injuries

Vehicle modification costs to accommodate your recovery from accident-related injuries

85% of lost wages (up to an adjustable, annual statutory cap)

Up to $20/day for housework and other “replacement services”

Other coverages that are included in Michigan no-fault insurance include:

Property Protection Insurance (PPI): This coverage pays up to $1 million for damage your vehicle does in Michigan to others’ property, such as buildings and fences. It also covers damage to another vehicle if the accident happens in Michigan and the vehicle is properly parked.

Residual Bodily Injury and Property Damage Liability Insurance (BI/PD): This coverage applies in situations where the driver is found to be at fault in an accident that causes serious injury, death, or property damage to another party. It provides legal defense if someone sues the policyholder. Michigan law requires minimum coverage amounts, but drivers can opt for higher limits.

Challenges of No-Fault Insurance

While there are advantageous features of no-fault insurance, there are some related pains, including:

In states like Michigan that have no-fault insurance, insured individuals commonly have higher premiums than those residing in tort states.

No-fault drivers can only sue negligent drivers if they experience a serious injury or incur substantial expenses as a result of the collision.

At-fault drivers may face fewer penalties in states that mandate no-fault insurance.

FAQs

Who pays for car damage in a no-fault state?

For damage to your vehicle in an accident, you are responsible for the collision coverage. This is an optional coverage that drivers can purchase on their own auto insurance policy. Collision coverage pays for damage to the policyholder’s vehicle regardless of who is at fault in Michigan.

Do insurance rates go up after a no-fault accident?

Generally speaking, if you are involved in a collision your premiums are likely to increase, even if you were not at fault.

Who pays the deductible with no-fault insurance?

Even if you are involved in a car accident caused by another driver in a no-fault state, you have to file a claim with your own insurance company. It’s common to pay the deductible and attempt to recover losses in addition to the amount of the deductible from the at-fault driver’s company, but it is not required by law.